(1)Since all public sector banks owe responsibility towards people of India,they must publicise names of all defaulters immediately.We people of India have every right to know it. (2)Govt.of India must take stern action to recover these loans even if it amounts to attach properties and assets of defaulters..If necessary the defaulter must also be jailed>(Like Sahara Case). Before taking stern steps & measures of recovery the PSU banks and govt. cannot declare these loans as NPAs.The recovery process must be made public.
RBI, the regulatory authority for banks have failed. And business people want a cut in CRR and repo rates. The malaise has been going for years. There were no checks on banks lending. The officers and managers should be taken to task. By bailing out banks will cause a burden on the exchequer and the tax payers will have to bear the brunt. I would not be surprised if some banks go burst
Almost all banks are functioning over 100 years and of which there are 27 PSU since 1969. To match with international accounting since 1993/94 NPAs are classified. NPA not means not recoverable- for the particular quarter the party has not serviced interest or instalments or both. Continue to be NPA for long it is classified as doubtful and then to loss assets after adjusting the security value provisions are made which affects the profitablity. On sales or disposal, comporomise etc the account is adjusted. The main difficulty bankers facing are legal hurdle which sometimes takes for many years. There are many causes for non-repayment of which the major share is intentional defaulter. Govt policies, non performance of govt, failure of monsoon, failure of industrial growth, manufacturing,exporting, infrastructure, real estates etc affect banking sector. As long as the borrowing companies perform well banking sector will do good. Any mismanagement in borrowing company will also affect the company as well as bankers. Natural calamities like floods, fire, earth quake etc are also one of the reasons. During this year manufacturing, agriculture due to poor monsoon, lesser industrial growth, exports sectors are declining are main causes for the increase of NPAs which affect profitability and down in global economy is also one of the reasons. It is in the hands of govt for revival. Mere words of praising themselves blaming with reasons with no action serve no purpose.
Major culprits are the CMDs and EDs who are rotated among PSUs based on their connection with the political parties. Since they stay in a Bank for a maximum of three years and they have no liking for the bank they are posted, they become more generous in lending. They also bring borrowers whom they could not satisfy in the previous bank for various reasons and dump on their new banks. Once they go to their next bank, these account show deterioration symptoms and finally become NPAs. It is best to have these top people from within who have successfully served their bank in various capacities and developed belongingness to their bank. They think twice before parting every single paise. Canara Bank is the best example for this.
Major chunk of NPA accounts must be those in which the Bank officers have the collusive hands. RBI should first order a thorough investigation into that aspect of the transactions to bring such assets in the hands of those bad elements within the bank's own premises while leaving no stone unturned to punish all the people involved; viz. the borrowers and the bank officials, alike. It will generate a huge sum to negate the NPAs to the maximum.
Apart from what is expressed by my fellow countrymen, I am of a firm opinion that the majority share holder of the PSU Banks being government of India is more focussed towards practicing SOCIAL BANKING rather than COMMERCIAL BANKING. PSU Banks are being used as a tool for fulfilling their political obligation. Secondly, the Political interference to the Credit out flow of the PSU Banks is one of the major concerns. Thirdly, the lack of Monitoring the apparent sickness noticed in Performing Assets is another reason for the NPAs. Very well judged article written by the author. Congratulations.
